China Unveils Measures to Boost Innovation Over Imitation

China says it wants to move away from serving as the world's factory and toward being the world's designer. As a result, the topics of promoting innovation and reducing dependence on imported technology have been high on the agenda at the annual two-week meeting of China's parliament, the National People's Congress.

China has been stung by international criticism over its rampant illegal copying of foreign products, but officials this week laid out other reasons why Chinese companies need to start inventing more of what they manufacture.

Chinese Minister of Science and Technology Xu Guanhua says growing pressure from foreign companies means China must develop its own technology if its businesses want to remain competitive in the world market.

Xu says that due to the lack of core technologies, for every mobile phone and every piece of digital equipment China sells, it has to pay fees to foreign patent holders. He says Chinese companies that are legally producing foreign-designed products are currently paying between 20 and 30 percent for licenses.

Xu also said the rising cost of labor is leaving China with no choice but to start innovating.

"We have seen a rise in the cost of labor force, that means there is a narrowing comparative advantage of the labor force in China," said Xu. "So, with all these factors taken into consideration, China is facing mounting pressure to become competitive internationally and that is why we say that the only way out is to promote the development of science and technology, to go for innovation and to build an innovation-oriented country."

Chinese officials announced a package of measures to promote developments in technology, including increased spending on research and education.

Analysts say becoming more of an innovator could help China meet demands by the United States and others for Beijing to do more to respect intellectual property rights. China is considered the world's top producer of pirated goods.